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United States District Court, W.D. Texas, Midland-Odessa Division.



Decided: January 09, 2023

Eduardo A. Sierra, Israel L. Medina, Medina Law Firm, P.C., Odessa, TX, for Plaintiffs. Theodore C. Schultz, David R. Stephens, Juan Daniel Saldana, Lindow Stephens Schultz LLP, San Antonio, TX, for Defendant.


Although a car crash was the catalyst, this case is about a breach of contract. Plaintiffs Jesus Martinez and Maria Sarabia were driving down a Midland County road when they were struck head-on by a man driving a stolen truck. Plaintiffs sustained extensive injuries due to the collision. But because the truck was stolen at the time of the accident, the company that insured the truck denied coverage.

At that time, Plaintiffs also had two automobile insurance policies through Defendant State Farm Mutual Automobile Insurance Company. Both policies were identical, providing Plaintiffs with uninsured/underinsured motorist coverage. Both policies insured up to $30,000 per person and $60,000 per accident. Both policies, however, contained two provisions.

The first provision (“Contesting Denied Recovery Clause”) described how the insured must sue if they were denied recovery after an accident with an uninsured motor vehicle. One requirement was that the insured must sue (1) the Defendant, (2) the owner and driver of the uninsured vehicle, and (3) any other parties who may be liable for the insured's damages.

The second provision (“Coverage Limits Clause”) outlined the maximum amount the insured would receive if they had one or more policies through Defendant that applied to the same bodily injury. Under the Coverage Limits Clause, the maximum amount to be paid would be the single highest applicable limit provided by any of the policies held by the insured.

Plaintiffs submitted a claim to Defendant under the first policy (“First Policy”). Defendant accepted the claim and paid Plaintiffs $60,000. Plaintiffs then submitted a claim for the same injuries under the second policy (“Second Policy”), which Defendant denied as exceeding the policy coverage limits in the Coverage Limits Clause.

On July 20, 2021, Plaintiffs sued Defendant in state court, alleging Defendant's refusal to pay under the Second Policy was a breach of contract, a violation of the Texas Insurance Code, and in bad faith. Defendant removed the case to this Court and moved for summary judgment on September 20, 2022.


Summary judgment's purpose is to isolate and dispose of factually unsupported claims or defenses.1 Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A dispute about a material fact is genuine when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”2 Substantive law identifies which facts are material.3 The trial court “must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment.”4

The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials” that establish the absence of a genuine issue of material fact.5 If the movant bears the burden of proof on a claim or defense for which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.”6 While the nonmovant bears the burden of proof, the movant may discharge the burden by showing that no evidence supports the nonmovant's case.7

Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.”8 A nonmovant must present affirmative evidence to defeat a properly supported motion for summary judgment.9 Mere denials of material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda will not suffice to carry this burden. Rather, the Court requires “significant probative evidence” from the nonmovant to dismiss a request for summary judgment.10 The Court must consider all the evidence but “refrain from making any credibility determinations or weighing the evidence.”11 And in contract interpretation cases arising under state law, summary judgment is appropriate if the contract is unambiguous and can be given a certain or definite legal meaning or interpretation.12


I. Plaintiffs' breach of contract claim.

Plaintiffs argue that Defendant breached the policy agreement by failing to pay its claim under the Second Policy for the damages Plaintiffs sustained. To succeed on a breach of contract claim under Texas law, Plaintiff must prove there was a (1) valid contract (2) where Plaintiff performed, (3) but Defendants breached, (4) and that breach damaged Plaintiff.13

Defendant's motion argues that Plaintiff did not fulfill their contractual obligations under the Second Policy, and thus cannot recover for breach. Defendant also argues that it did not breach the Second Policy because no other benefits needed to be paid under the Second Policy's express terms. Plaintiffs counter that genuine issues of material fact still exist.

A. Plaintiffs did not fulfill their contractual obligations.

It is well established in Texas law that a party to a contract cannot succeed on a breach of contract claim unless they have performed their contractual obligations.14 Whether Plaintiffs performed (or didn't) raises a question of law and fact. Courts generally interpret contracts to determine the parties' contractual duties and obligations. Here, the Second Policy outlined the precise way Plaintiffs could contest Defendant's denial of coverage—specifically who Plaintiffs must sue. Under the Contesting Denied Recovery Clause, Plaintiffs had to (1) sue Defendant, (2) sue the owner and driver of the stolen truck, and (3) any other parties who may be liable for Plaintiffs' damages. Thus, the Second Policy's unambiguous language outlined Plaintiffs' contractual obligations.

In contrast, whether a party performed those obligations is generally left to the fact finder.15 So Plaintiffs are correct that their performance is a fact issue. But they are wrong to think this means this Court can't rule on Defendant's motion. Only issues with “disputed facts” need to make it to a jury.16 And here, the facts are not disputed.

Plaintiff had to sue the correct people as required by the Policy. Yet Plaintiff sued only one—Defendant. Defendant provided evidence to that effect and thus met its summary judgment burden. But Plaintiffs provided no “affirmative evidence” to the contrary—simply stating that a factual dispute exists does not make it so. As a result, Defendant's summary judgment on Plaintiffs' breach of contract claim should be granted.

B. Defendant did not breach the Second Policy's terms.

Even if Plaintiff had provided evidence revealing a material factual dispute, they still would be unable to prove Defendant breached the Second Policy. Unlike performance, whether a party breached a contract is question of law.17 Here, both policies had the Coverage Limits Clause. As stated above, the clause provides that when the coverage of one or more of Defendant's uninsured motorist policies applies to “the same bodily injury,” the Policy's maximum payout would be “the single highest applicable limit provided by one of the policies.”18

Defendant already paid Plaintiffs $60,000, the maximum under either policy. Yet Plaintiffs seek another $60,000, which directly contravenes both policies' unambiguous language. Defendant's refusal to pay another $60,000 was expressly allowed by the First and Second Policy because no benefits were left to be paid. Thus, Defendant did not breach, and summary judgment on Plaintiff's breach of contract claim should be granted.

II. Bad faith and insurance code claims.

Plaintiffs also allege Texas Insurance Code and common law bad-faith claims against Defendant.19 The law, however, is clear: refusal to pay a claim not covered by a policy does not violate the insurance code or commit bad faith.20 What's more, Plaintiffs admit they must first prove they are entitled to benefits under the Second Policy to potentially succeed on their bad faith and violations of the Texas Insurance Code. Therefore, Defendant's summary judgment motion on these claims should be granted.


It is therefore ORDERED that Defendant's Motion for Summary Judgment be GRANTED. (Doc. 16).

It is so ORDERED.


1.   Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

2.   Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

3.   Id.

4.   Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).

5.   Fed. R. Civ. P. 56(c)(1)(A); Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

6.   Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986).

7.   Celotex, 477 U.S. at 325, 106 S.Ct. 2548; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).

8.   Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248–49, 106 S.Ct. 2505).

9.   Anderson, 477 U.S. at 257, 106 S.Ct. 2505.

10.   In re Mun. Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat'l Broad. Co., 584 F.2d 111, 114 (5th Cir. 1978)).

11.   Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).

12.   D.E.W., Inc. v. Local 93, Laborers' Int'l Union, 957 F.2d 196, 199 (5th Cir. 1992).

13.   Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir. 2016) (applying Texas law).

14.   See, e.g., Carr v. Norstok Bldg. Sys., Inc., 767 S.W.2d 936 (Tex. App. Beaumont 1989).

15.   See, e.g., Vast Constr., LLC v. CTC Contractors, LLC, 526 S.W.3d 709, 718 (Tex. App.—Houston [14th Dist.] 2017, no pet.).

16.   See, e.g., Sullivan v. Barnett, 471 S.W.2d 39 (Tex. 1971) (“Submission of an issue on an undisputed fact is unnecessary.”).

17.   Porta–Kamp Mfg. Co., Inc. v. Atlanta Mar. Corp., 753 S.W.2d 699, 702 (Tex. App.—Houston [14th Dist.] 1988, writ denied) (citing Fort Worth Neuropsychiatric Hospital, Inc. v. Bee Jay Corp., 600 S.W.2d 763 (Tex. 1980)).

18.   Doc. 16 at 5–6.

19.   Doc. 1, Ex. A at 5–6.

20.   Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995).


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